Everything about the financial services company La Hougue was supposed to stay secret for ever, and for more than 40 years it did. Secrecy was essential: the company made its living not just by creating trusts and companies that might be used for tax dodging and money laundering; it actually helped organise all aspects of the tax dodging and money laundering for its clients. It’s secret workings give a rare inside view of the dirty side of tax havens and the offshore world.
Nicky Hager, European Investigative Collaborations, 16 Oct 2020
La Hougue was a specialist operation based in the UK-linked tax haven of Jersey. It was later renamed as Pantrust in Panama and is apparently still operating from Panama today. Its services have included hiding money, forging documents, evading taxes, investing dirty money in the normal economy and finding ways for the clients to spend their undeclared money.
A special service, for important clients and special fees, was the
document forgery. Former staff member Wayne Weaver said in a taped
conversation that when the company head, Richard Wigley, “want[ed]
to put forward a certain position there’ll be a set of documents that
he creates to do that. You know he’s got old printers, old machines, old
paper, old pens, to put in place whatever he wants…. if he wants to put
forward a certain position there’ll be a document. There’ll be an old
document. You know, on paper that’s been around a long time. It won’t be
new paper. It won’t be new ink.“
Richard Wigley, contacted via his lawyers, declined to comment for this story.
Weaver was Wigley’s right hand man from 1998-2010. Their records since
parting ways sum up the company: Wigley admitted document forgery to a
US court in 2016 – for fabricating multi-million dollar loan documents –
and Weaver was fined US$57.9 million in a US Securities and Exchange
Commission case in 2017 for “pump and dump” share market fraud. He
could not be reached to comment.
La Hougue’s long-hidden activities have been laid bare by a major leak of decades of the company’s records. Media organisations collaborating in EIC have obtained 350,000 secret company files detailing the money laundering operations. The data includes correspondence, money wire transfers, accounting ledgers, hand written notes and minutes of meetings.
The leak comes in the footsteps of the Panama Papers and a recent leak of the company registry from the Bahamas tax haven shared with EIC. A team of investigative journalists from a range of countries has been analysing the La Hougue-Pantrust files for months.
Whistle blowers
The trove of tax haven secrets has only come to light because of the actions of two unlikely whistleblowers: the daughter of the long-time owner of La Hougue, Tanya Stock, and her husband Darrin Stock.
Tanya discovered in about 2012 that her La Hougue-managed family trusts had been inexplicably drained of many of their assets. The couple set out to try to find and recover the lost money. A protracted legal battle has followed in the years since.
It was during these years that Tanya and Darrin Stock discovered the secret La Hougue files: hundreds of boxes of neatly-kept paper files stored in an unused squash court at St John’s Manor, the Jersey manor house that Tanya and Darrin shared with her father. The manor house had also for many years housed the offices of La Hougue. The files were left behind when the trust company hurriedly relocated to Panama in 2007.
At first Tanya and Darrin searched the files to help their court case. Gradually they realised that the files revealed large-scale wrongdoing and an even larger problem: the Jersey authorities. They agreed to become whistle blowers, to help raise public awareness about tax havens and in particular Jersey. This is the first time that the people behind a major tax haven leak have agreed to their names and stories being publicised.
PS Shred this after signing
The company specialised in leaving no incriminating records of its interactions with clients. It was standard practice to meet clients face to face, such as in the lobbies of expensive hotels, giving advice and accepting instructions verbally. The principal staff often travelled to meet clients in person, leaving no record. They advised clients, if necessary, to use untraceable communications, such as anonymous email addresses.
For one prospective client “It was agreed that no
correspondence would be sent to him and a meeting would take place
either in Europe or in the USA at a suitable opportunity.” The meeting occurred at the Hilton Hotel
in Chicago, with Wigley flying in and out of Chicago especially for the
meeting.
Throughout the documents, Wigley and his staff refer to clients strictly by four-digit client numbers. Bank accounts and bank transactions use the same client numbers.
Wigley wrote to a client: “We make particular emphasis on
confidentiality and our clients have designated account numbers, all
matters being carefully handled so as to restrict release of information
to third parties.”
A 14 June 2006 letter, which appears to discuss forged documents, is
headed “CONFIDENTIAL — NOT TO BE RETAINED.” The letter ends “PS Shred this after signing”.
Many clients would still be secret, despite the leak, had there not been
an April 2014 company spreadsheet found in the data, revealing the names
behind the client numbers.
A company cannot function without internal files, recording what they have agreed to do for each client and which money is being moved where. It is these internal records that make up the La Hougue files.
Hand-picked clients
La Hougue and Pantrust were careful only to take on new clients who had
been referred by existing clients or other trusted people. From the
early years of the company, Wigley wrote that La Hougue was “a
small Trust Company run on a highly confidential basis, all clients
being introduced by existing known contacts rather than having a shop
front.”
Many of these referrals came from the company’s secret owner, John W
Dick, who had “a number of private arrangements with La Hougue clients”
whereby he received “a percentage fee for monies introduced’ and, in
some cases, a share in “tax savings arrangements”.
The La Hougue company was established in 1984, when four US businessmen
led by Dick decided they wanted their own private trust company – one
“set up to provide the highest possible level of confidentiality and security,” Wigley wrote in July 1991. “Because of the way La Hougue is structured,” he continued, “it has been possible to do things which Barclay Trust and other companies would not even consider.”
The initial La Hougue staff, including Wigley and his long-term deputy Jenny Rimeur, had moved from Barclay Trust (part of Barclays Bank), where Dick had been Wigley’s client. Dick kept his ownership of Le Hougue secret, including from his own family, for more than 30 years.
In a letter sent to EIC by his lawyers, John Dick denied being the owner
of La Hougue. He blamed La Hougue’s “serious, orchestrated and sophisticated fraud” on Richard Wigley and said he “had no knowledge of them until Wigley’s activities were discovered.”
The company has only ever had a few hundred clients at a time for its special services. They come from about 25 countries, most from the UK, US, Canada and Europe, and others as far flung as Russia, Kenya and South Africa.
Wigley regularly told clients that La Hougue did not provide tax or
investment advice. He got them to fill out a questionnaire that said “I am satisfied that I am acting within the law [and] have made and will make all tax returns”, that funds had not come from criminal activities,
and “I confirm that I am not seeking any investment or tax advice from La Hougue.”
But he explained to a client, in a letter headed “VERY CONFIDENTIAL”,
that “I need this or I am supposed to delve into the intricacies of your tax situation”. To another client, Wigley wrote, “I hate paying tax”. He
assured a client that “the possibilities [for ‘significant tax savings’] are many and varied.”
Departing Jersey in the night
For its first 25 years, La Hougue operated in Jersey without any
significant problems with the sleepy Jersey authorities. The former
staff member, Wayne Weaver, joked about the lack of oversight of the
company by the Jersey Financial Services Commission (JFSC). “It was the greatest thing,” he said in the recorded 2014 conversation, “we
got a letter from the [JFSC] woman at the time… basically saying great,
thank you very much, love it, you know, all good, we had no issues
whatsoever with the JFSC.”
In the early 2000s Wigley wrote: “In the event we find Jersey
to be an unacceptable centre to provide trustee services, eg there is a
register, and we get back to ‘KYC’ [Know Your Client] problems, etc,
which would damage our ability to provide a confidential service, then
we can move our Trusts into the B.V.I.” They had set up a back-up British Virgin
Islands trust company in case it should “become appropriate.“”
He set down the advantages of the BVI option in a hand-written memo: The result of the exercise:
- a) La Hougue if attacked does not hold major asset
- b) La Hougue will have minimal records
- c) Attacker will have difficulty tracing the assets
- d) An additional wall of defence has been created. [La Hougue Trustees file
As it turned out, La Hougue decided in late 2007 to relocate to Panama
(retaining the back-up company structures in BVI). After 24 years in
Jersey, the La Hougue staff cleared out their St Heliers office on a
Saturday night and were gone. But they left with most of their files
remaining in Jersey, where they sat forgotten until they were discovered
by the whistle blowers. Pantrust continued operations in Jersey for a
few years through a company called Tribute, “effectively an outsourcing business for the Panamanian Trust.”
A few years before the Panama Papers hit the news, while still based in
Jersey, Wigley contrasted the Panama-based Mossack Fonseca with his own
standards of how things should be done. He wrote a 5 April 2006 letter
advising an associate about the best place to get offshore services in
Panama. Wigley had visited Mossack Fonseca in Panama, he wrote
dismissively, but they “do everything by the book”. Instead he
recommended a Panamanian lawyer: “He has a much more pragmatic way of doing things and would, I believe, be the man to help you.”
By early 2008 Wigley was established in Panama. He wrote to a client
about the “many benefits” of his new base. “Given the
recent unrest in Liechtenstein, the growing distrust of all matters
European, and the increasingly aggressive tax tactics of many of their
governments, including the continued willingness to exchange
information, we feel that all the time and effort to relocate our
business to Panama in order to maintain the highest levels of
confidentiality has been justified to the point of prescience.”
But Wigley would discover that the Panama regulators were stricter than
laissez faire Jersey. Seven years after La Hougue moved to Panama –
operating under the name Pantrust but with many of the same key staff
and clients – the company was investigated by the Panama Superintendent
of Banking. His 2015 report about Pantrust is a damning list of dodgy
practices the company had used for years. The report concluded that
Pantrust International was “exercising the trust business in a
harmful manner, hazardous to the public interest, its customers, and to
the detriment of the good name of the financial centre hosted in this
jurisdiction.”
This included “loans” where there was “no documentation that supports the existence of the loan agreements”. The loans had no interest nor
capital reimbursement, and there were registries identified as
“Dummyaccount”. “They are merely entries in the account books,” the
report said. The company’s Panama operating licence was revoked.
Since then, key Pantrust staff such as Richard Wigley and his son James Wigley have remained in Panama. They appear to have used Wigley’s back-up plan: the British Virgin Islands Financial Services Commission shows a company called La Hougue Trustees Limited still licenced to undertake trust business in the BVI in August 2020.
After La Hougue left Jersey, the Jersey Financial Services Commission
had helped the company retrospectively tidy up the paperwork that should
have been done for the move. La Hougue “kindly furnished the Commission”
with a list of the companies and trusts it had administered from Jersey;
and informed the Commission that “all the customer bank account
maintained at Barclays Bank Plc in Jersey (approximately 1000 accounts)
will be closed and balances transferred to HSBC in Panama.”
But the Jersey Financial Services Commission’s deputy director of trust
company business reassured Wigley that – as had been the case for the
previous 24 years – it was “not seeking to know which customers are connected to one another”, or even “the identity of individual customers.”
According to the UK Tax Justice Network, Jersey is “among the worst tax havens” on earth.
11 ways to launder your money
Wigley’s preferred method for meeting clients was face to face, minimising incriminating documents. But at least once, for an unknown reason, he broke his own rule. He followed up one of his face-to-face meetings with a letter to a trusted client, spelling out 11 dishonest options for hiding the client’s money in tax havens.
The 12-page letter is called “Summary of Methods available to enable the movement of assets offshore”. In effect, it is a guide to 11 ways to
launder money. “Naturally, I have a concern that any of these papers should fall into the wrong hands,” Wigley noted, “so please guard them carefully.” His caution was understandable. The descriptions of the
methods that followed were explicit in their intention to deceive and
evade laws.
The first method, “Los Cabos property investment”, involved fake
investment in a real estate development on Mexico’s Baja California
peninsula. La Hougue had bought 65 acres of land there and produced a
brochure and site plan. But Wigley made it clear that no real investment
was planned.
He offered that the client could “invest” US$100,000s, about the value
of an apartment. “An agreement would be drawn up and the remittance would be made payable to Los Cabos,” he explained, but in fact “the monies would be credited, through La Hougue, direct to the client’s account.” No money would go to the Mexican property development. It was
simply a trick to move a large sum of money into the client’s secret
offshore bank account.
Wigley reassured the client that “If enquiries were made by the
investor’s Tax Authority, suitable confirmations and assurances as to
the non-profitability can be given to show that, to date, there had been
no capital gain and no income distributions had occurred.” It was
unlikely the ruse would be uncovered, however. “It should be noted
that only the land is retained in the name of Los Cabos and the
business transaction is solely under the control of of La Hougue,” he wrote –
i.e. the only records would be inside Wigley’s company, where tax haven
laws protected them from scrutiny. “No information could be obtained separately by any investigating party,” he said.
Another of the 11 methods – the “consultancy fees” trick – involved
business owners sending company money overseas to pay non-existent
consultancy fees. Wigley explained: “there are usually opportunities to complete a Consultancy arrangement with an offshore Company,” an
arrangement that would “purportedly” benefit the client’s company. These
might be finding sales outlets, business advice and business
introductions, “which services appear justified”. The client’s company
received invoices and paid the fees, but in reality no payment was made
to a consultant. The money was “credited to the client’s Trust account.”
Besides hiding the money in a secret offshore account, Wigley noted that
the (false) consultancy fees could be claimed as a business expense to
“reduce the client’s taxes locally”.
A third method recommended that when the client received one-off
payments, it might be possible to transfer the money directly offshore
“there then being no record of the receipt of the funds in the client’s country,” Wigley wrote. Once again “the funds remitted offshore would be credited to the client’s Trust account.” He emphasised that “such monies must not be reportable by the entity issuing the payment”; and noted
“This arrangement is extremely effective with remittances received
from entities resident in countries other than the client related
entity.”
And so on, through eight more methods, all designed to evade taxes, hide
money and cover the tracks of crime.
Another set of techniques enabled hidden money to be anonymously invested back into legal economy: buying shares and property, and lending money to others (including the clients anonymously lending their own money to themselves).
The various methods were “layered” – such as transferring money through
a succession of tax havens and seemingly unconnected companies with
names like Kraken Investments and Danehill Trading – making it harder
for government authorities to notice and follow the money. There were
also “dummy entries” in the financial records (so called by the staff);
and numerous money transfers falsely recorded as “loan repaid”, when
there was no lender or loan document. Wigley’s son James wrote an email
to another staff member on 11 March 2008: “When posting dummy entries showing amounts paid – ensure that extended narrative is included stating that not actually paid etc.”
Some special clients received extra protection by having other people’s names recorded, even on the internal La Hougue records, as the legal owners of their offshore companies and trusts.
Finally, a large part of the services offered by La Hougue/Pantrust
involved methods to allow clients secretly to spend their hidden money.
Houses were anonymously purchased using offshore money in favourable
locations such as central London, then the trust company paid to
renovate the houses, redecorate them and cover all the bills. They
supplied untraceable client credit cards, holidays and travel. Other
clients were paid overseas “consultancy fees” for work they had supposedly done for overseas companies – a repeated La Hougue
trick – when really they were receiving their own money back from
off-shore accounts.
Richard Wigley did not respond to questions about this document sent on behalf of EIC.
Read more stories published under the JERSEY OFFSHORE project, as well as an explainer on how this project came about.